nep-pub New Economics Papers
on Public Finance
Issue of 2021‒03‒01
seven papers chosen by
Kwang Soo Cheong
Johns Hopkins University

  1. Government debt post COVID-19: Back to Golden Rules By Breuer, Christian
  2. Age-targeted Income Taxation, Labor Supply and Retirement By Gustafsson, Johan
  3. The Elasticity of Taxable Income: A Meta-Regression Analysis By Carina Neisser
  4. Rethinking How We Score Capital Gains Tax Reform By Natasha Sarin; Lawrence H. Summers; Owen M. Zidar; Eric Zwick
  5. A Tax-Benefit Microsimulation Model for Personal Income Taxation in Italy By Elena Miola; Marco Manzo
  6. Nudges and Threats: Soft vs Hard Incentives for Tax Compliance By Andersson, Henrik; Engström, Per; Nordblom, Katarina; Wanander, Susanna
  7. Tax and compliance of individual taxpayer By Meda Andini; Alfa Rahmiati

  1. By: Breuer, Christian
    Abstract: The COVID-19 crisis has caused public debt to increase dramatically, which is why the German and European fiscal rules are currently suspended. In addition to the new assessment of the fiscal costs at low interest rates (r
    Keywords: Government Debt,Fiscal Rules,Low Interest Rates
    JEL: E62 H56 H63
    Date: 2021
  2. By: Gustafsson, Johan (Department of Economics, Umeå University)
    Abstract: This paper studies the life-cycle effects of favorable marginal tax treatment of older workers on their optimal life-cycle labor supply, retirement timing, and savings. I develop a structural model in continuous time where the life-cycle of a representative agent is divided into three distinct phases: pre-treatment, post-treatment, and retirement. Solutions for consumption/savings, labor supply/leisure, and retirement timing are then obtained by solving the model as a salvage value problem. I then calibrate the model to Swedish earnings data and find that the increased extensive margin labor supply is partially offset by a reduction of the hours of work in the pre-treatment period. The total effect is however an increase in life-cycle labor supply, and consumption.
    Keywords: Retirement age; life cycle; tax heterogeneity; savings; consumption; leisure
    JEL: D15 J22 J26
    Date: 2021–02–04
  3. By: Carina Neisser (University of Cologne and IZA Bonn)
    Abstract: The elasticity of taxable income (ETI) is a key parameter in tax policy analysis. To examine the large variation found in the literature of taxable and broad income elasticities, I conduct a comprehensive meta-regression analysis using information from 61 studies containing 1,720 estimates. My findings reveal that estimated elasticities are not immutable parameters. They are correlated with contextual factors and the choice of the empirical specification influences the estimated elasticities. Finally, selective reporting bias is prevalent, and the direction of bias depends on whether deductions are included in the tax base.
    Keywords: elasticity of taxable income; income tax; behavioural response; meta-regression analysis
    JEL: C81 H24 H26
    Date: 2021–02
  4. By: Natasha Sarin (University of Pennsylvania - Carey Law); Lawrence H. Summers (Harvard University - Harvard Kennedy School of Law); Owen M. Zidar (Princeton University - Department of Economics & School of International and Public Affairs; NBER); Eric Zwick (University of Chicago - Booth School of Business; NBER)
    Abstract: We argue the revenue potential from increasing tax rates on capital gains may be substantially greater than previously understood. First, many prior studies focus primarily on short-run taxpayer responses, and so miss revenue from gains that are deferred when rates change. Second, the composition of capital gains has shifted in recent years, such that the share of gains that are highly elastic to the tax rate has likely declined. Third, focusing on capital gains tax collection may understate fiscal spillovers from decreasing the preferential tax treatment for capital gains. Fourth, additional base-broadening reforms, like eliminating stepped-up basis and making charitable giving a realization event, will decrease the elasticity of the tax base to rate changes. Overall, we do not think the prevailing assumption of many in the scorekeeping community—that raising rates to top ordinary income levels would raise little revenue—is warranted. A crude calculation illustrates that raising capital gains rates to ordinary income levels could raise $1 trillion more revenue over a decade than other estimates suggest. Given the magnitudes at stake, scorekeeping procedures employed in evaluating capital gains should be made more transparent and be the subject of external professional debate and review.
    JEL: H0 H2 H3
    Date: 2020
  5. By: Elena Miola (Ministry of Economy and Finance); Marco Manzo (Ministry of Economy and Finance)
    Abstract: The paper presents a static tax-benefit microsimulation model developed by combining the IT-SILC 2016 dataset, a survey on Italian incomes and living conditions, and administrative tax return micro data in the same year. The dataset derives from the exact matching of survey and administrative data. The microsimulation model reproduces in detail the features of Italian personal income tax and benefit system and is aimed at evaluating tax revenue and fiscal policies distributive impact. Redistribution analysis is carried out by using concentration, progressivity and redistribution indices for individual taxpayers and equivalent households. Inequality issues are analysed further through the computation of decile and quintile distribution of household gross and disposable income, by using the tax-benefit microsimulation model.
    Keywords: tax-benefit microsimulation model, personal income taxation, redistribution, inequality
    JEL: D31 H20 H24
    Date: 2021–01
  6. By: Andersson, Henrik (Uppsala University); Engström, Per (Uppsala University); Nordblom, Katarina (Department of Economics, School of Business, Economics and Law, Göteborg University); Wanander, Susanna (The Swedish Tax Agency)
    Abstract: We study what induces delinquent taxpayers to pay their taxes due. We use high quality administrative data from the Swedish Tax Agency. We find a strong effect of the standard enforcement regime: a threat of having the debt handed over to the Enforcement Agency increases payments by roughly 10 percentage points. When including actual enforcement, payment increases by around 20 percentage points compared to those who do not risk enforcement. In a field experiment, we compare these effects of standard enforcement to those of much milder nudges, consisting of letters reminding tax delinquents to pay their taxes due. We find that a “pure nudge”, i.e., the inclusion of an extra piece of paper with no valuable information, has an effect of 7-8 percentage points for those who do not risk enforcement upon non-payment. However, the same nudge has no detectable effect for the group at risk of enforcement. Social-norm messages in turn increase payments both for those who risk enforcement and for those who do not, but to a much smaller degree. We also find that a pure nudge works much better for those who receive a physical letter than for those who receive information electronically, while the reaction to the social-norm nudge is significant for those who get the electronic information.
    Keywords: tax compliance; RCT; nudge; quasi-experiment; regression discontinuity
    JEL: C21 D03 D91 H24 H26
    Date: 2021–02
  7. By: Meda Andini (Airlangga University); Alfa Rahmiati (Airlangga University)
    Abstract: This study aims to obtain empirical evidence about the relationship between income level, tax sanctions, and trust in government with individual taxpayer's compliance through tax morale. This study is designed as a quantitative, and the data analysis used is path analysis. The research sample was 100 individual taxpayers in Pamekasan Regency. We are using path analysis techniques with the help of SPSS software. The results of this study are the income level has a relationship with individual taxpayer's compliance through tax morale, but tax sanctions and trust in the government do not have a relationship with individual taxpayer's compliance through tax morale. The limitation of this research is that the research scope is still limited, only in Pamekasan Regency. Further research related to tax morale can add other independent variables and expand the research sample's scope.
    Keywords: Income level,tax sanctions,trust in government,tax morale,individual taxpayer's compliance
    Date: 2020

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